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Interim results
Master Drilling Group Limited
(Incorporated in the Republic of South Africa)
Registration number 2011/008265/06
JSE share code: MDI ISIN: ZAE000171948
(“Master Drilling” or “the Company”)
Unaudited interim report
for the six months ended 30 June 2015
Highlights for the period
- Revenue up by 3,1% in ZAR terms, but down 7,5% in US$ terms
- Profit after tax up by 11,0% from US$9.3 million to US$10.4 million
- Profit attributable to equity shareholders up by 10,5% from US$8.4 million to US$9.3 million
- ZAR Headline earnings per share up by 22,9% from 61,0 cents to 75,0 cents
- US$ Headline earnings per share up by 10,4% from 5.7 cents to 6.3 cents
- Cash generated from operations up by 175,3% from US$8.7 million to US$24.0 million
COMMENTARY
Financial Overview
The group achieved revenue growth in ZAR terms of 3,1%. Currency fluctuations suppressed revenue
expressed in US$ terms by 6,4%. Fleet mix and fleet utilization further impacted this result, resulting
in a 7,5% decrease in total group revenue.
Profitability of the group improved with profit after tax up by 11% in US$ and 23,7% in ZAR terms.
This is attributable to cost saving initiatives and operational efficiencies.
Increase in cash generated during this period reflects the result of cost savings and stringent working
capital management.
About Master Drilling Group Limited
Master Drilling was established in 1986 and listed on the Johannesburg Stock Exchange during the
latter part of 2012. Master Drilling is a global business, with established operations in Africa and
Latin America including South Africa, Chile, Brazil, Peru, Mexico, DRC and Zambia amongst others.
Master Drilling, a recognised world leader in the raise bore drilling services industry, provides
specialised drilling services to blue-chip major and mid-tier companies in the mining, civil
engineering and energy sectors.
The vertically integrated business model supports end-to-end solutions in terms of design and
assembly of rigs, training and engineering support and ultimately the diverse drilling applications.
These core activities are production stage centered reducing exposure to volatility in business
sectors and commodity markets.
The economic downturn in commodities caused us to rely heavily on the four strategic pillars of the
group. Strategic progress during the first half of the year includes:
- Commissioning of the RD8-1500, the largest raise bore rig in the world
- Expansion of geographical footprint into Ecuador and Colombia
- Service offerings in the energy sector on hydro projects
- Continuation of drill rig fleet automation program to enhance safety and efficiencies
- Expansion of fleet size to 145 rigs.
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
for the Master Drilling Group for the half year ended 30 June 2015
USD USD
30 Jun 2015 31 Dec 2014
Assets
Non-current assets 118,856,446 110,071,661
Current Assets 58,830,190 60,581,929
Total assets 177,686,636 170,653,590
Equity and liabilities
Equity
Equity 104,316,123 100,203,562
Non-controlling interest 16,540,847 15,474,542
Total equity 120,856,970 115,678,104
Liabilities
Non-current liabilities 20,934,148 21,096,817
Current liabilities 35,895,518 33,878,669
Total liabilities 56,829,666 54,975,486
Total equity and liabilities 177,686,636 170,653,590
ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the Master Drilling Group for the half year ended 30 June 2015
USD USD
30 Jun 2015 30 Jun 2014
Revenue 60,300,461 65,187,683
Cost of sales (36,816,661) (43,857,184)
Gross profit 23,483,800 21,330,499
Other operating income 829,956 706,319
Other operating expenses (8,675,566) (8,726,054)
Operating profit 15,638,190 13,310,764
Investment revenue 474,483 461,819
Finance costs (744,204) (693,540)
Profit before taxation 15,368,469 13,079,043
Taxation (4,991,656) (3,732,038)
Profit for the year 10,376,813 9,347,005
Other comprehensive income:
Exchange differences on translating foreign operations (5,300,056) (465,823)
Other comprehensive (loss)/income for the year net of taxation (5,300,056) (465,823)
Total comprehensive income 5,076,757 8,881,182
Profit attributable to: 10,376,813 9,347,005
Owners of the parent 9,310,508 8,426,106
Non-controlling interest 1,066,305 920,899
Total comprehensive income attributable to: 5,076,757 8,881,182
Owners of the parent 4,010,452 7,960,283
Non-controlling interest 1,066,305 920,899
Earnings per share (USD)
Basic earnings per share (cents) 6.3 5.7
Headline earnings per share (cents) 6.3 5.7
Diluted earnings per share (USD)
Diluted basic earnings per share (cents) 6.2 5.6
Diluted headline earnings per share (cents) 6.2 5.6
Earnings per share (ZAR)
Basic earnings per share (cents) 74,8 60,8
Headline earnings per share (cents) 75,0 61,0
Diluted earnings per share (ZAR)
Diluted basic earnings per share (cents) 73,7 59,9
Diluted headline earnings per share (cents) 73,8 66,5
EARNINGS PER SHARE USD USD
RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS 30 Jun 2015 30 Jun 2014
Basic earnings for the year 10,376,813 9,347,005
Deduct:
Non-controlling interest (1,066,305) (920,899)
Attributable to owners of the parent 9,310,508 8,426,106
Loss/(Gain) on disposal of fixed assets and impairments 24,059 46,352
Tax gain on disposal of fixed assets and impairments (5,198) (12,842)
Headline Earnings for the year 9,329,369 8,459,616
Earnings per share (cents) 6.3 5.7
Diluted earnings per share (cents) 6.2 5.6
Headline earnings per share (cents) 6.3 5.7
Diluted headline earnings per share (cents) 6.2 5.6
Net asset value per share (cents) 81.5 77.6
Tangible net asset value per share (cents) 79.8 75.9
Dividends per share (cents) – –
Weighted average number of ordinary shares at the end of the year for the purpose of basic earnings
per share and headline earnings per share 148,265,491 148,265,491
Effect of dilutive potential ordinary shares - employee share options 2,327,286 2,036,764
Weighted average number of ordinary shares at the end of the year for the purpose of diluted basic
earnings per share and diluted headline earnings 150,592,777 150,302,255
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Master Drilling Group for the half year ended 30 June 2015
Equity due to Foreign currency Share-based Total
change in control translation payments Attributable to Non-controlling Shareholders'
Share capital of interests reserve reserve Total reserves Retained income owners of parent interest equity
USD
Balance as at 31 December 2014 146,607,965 (58,264,013) (21,613,831) 207,864 (79,669,980) 33,265,577 100,203,562 15,474,542 115,678,104
Shares-based Payments – – – 102,109 102,109 – 102,109 – 102,109
Total comprehensive income for the year – – (5,300,056) – (5,300,056) 9,310,508 4,010,452 1,066,305 5,076,757
Total changes – – (5,300,056) 102,109 (5,197,947) 9,310,508 4,112,561 1,066,305 5,178,866
Balance as at 30 June 2015 146,607,965 (58,264,013) (26,913,887) 309,973 (84,867,927) 42,576,085 104,316,123 16,540,847 120,856,970
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
for the Master Drilling Group for the half year ended 30 June 2015
USD USD
30 Jun 2015 30 Jun 2014
Net cash from operating activities 20,283,346 4,585,036
Net cash from investing activities (16,163,686) (10,787,243)
Net cash from financing activities (2,195,600) (1,630,296)
Total cash movement for the year 1,924,060 (7,832,503)
Cash at the beginning of the year 12,477,082 16,565,233
Effect of exchange rate movement on cash balances (781,753) (287,812)
Total cash at the end of the year 13,619,389 8,444,918
PROPERTY, PLANT AND EQUIPMENT
Accumulated
depreciation and
USD impairment
30 Jun 2015 Cost losses Carrying value
Land and buildings 3,708,271 (42,253) 3,666,018
Plant and machinery 96,701,338 (27,377,468) 69,323,870
Assets under construction 5,232,701 – 5,232,701
Furniture and fittings 1,166,405 (371,266) 795,139
Motor vehicles 3,228,786 (1,153,763) 2,075,023
Office equipment 69,179 (17,886) 51,293
IT Equipment 596,949 (320,010) 276,939
Finance lease: Plant and equipment 25,176,816 (4,181,873) 20,994,943
Computer software 1,933,501 (604,519) 1,328,982
Patents 229,500 – 229,500
Total 138,043,446 (34,069,038) 103,974,408
Accumulated
depreciation and
USD impairment
31 Dec 2014 Cost losses Carrying value
Buildings 3,928,551 (34,310) 3,894,241
Plant and machinery 80,900,372 (24,904,365) 55,996,007
Assets under construction 7,951,543 (7,862) 7,943,681
Furniture and fittings 1,173,654 (358,585) 815,069
Motor vehicles 3,128,981 (1,135,691) 1,993,290
Office equipment 83,059 (55,302) 27,757
IT equipment 576,474 (299,256) 277,218
Finance lease: Plant and equipment 25,717,363 (3,720,506) 21,996,857
Computer software 1,873,601 (435,866) 1,437,735
Total 125,333,598 (30,951,743) 94,381,855
SEGMENTAL REPORTING
Mining activity
The following table shows the distribution of the Company's
Combined sales by mining activity, regardless of where the
goods were produced:
30 Jun 2015 30 Jun 2014
Sales revenue by stage of mining activity USD USD
Exploration – 2,666,745
Capital 13,901,317 12,266,922
Production 46,399,144 50,254,016
60,300,461 65,187,683
Gross profit by stage of mining activity
Exploration – 782,871
Capital 5,465,803 3,612,752
Production 18,017,997 16,934,876
23,483,800 21,330,499
The CEO manages the activities of the Group concomitant to the
inherent risks facing these activities. It is for this reason that the
activities are separated between exploration, capital and
production stage drilling. The equipment and related liabilites of
the group can be used at the multiple stages and therefore
cannot be presented per activity.
Geographical segments
Although the Company's major operating divisions are managed on a worldwide basis, they operate in four principal geographical areas of the world.
30 Jun 2015 30 Jun 2014
Sales revenue by geographical market USD USD
Africa 13,683,945 8,790,294
Latin America 29,002,433 31,993,268
Other countries 221,935 1,146,506
South Africa 17,392,148 23,257,615
60,300,461 65,187,683
Gross profit by geographical market
Africa 6,792,731 5,358,746
Latin America 9,419,710 9,411,095
Other countries 290,448 (293,713)
South Africa 6,980,911 6,854,371
23,483,800 21,330,499
Note: The gross profit percentages vary based on drilling ground
conditions, competition in the markets and the mix of in-country
and foreign cost
Sponsor: ABSA Bank Limited (acting through its Corporate and Investment banking division)
Date: 28/09/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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